Of course, if you're the type of investor who prefers buying stocks without the burden of debt, then don't hesitate to discover our exclusive list of net cash growth stocks, today.
Case in point: We've spotted 6 warning signs for Tetra Bio-Pharma you should be aware of, and 3 of them make us uncomfortable. However, not all investment risk resides within the balance sheet - far from it. The balance sheet is clearly the area to focus on when you are analysing debt.
#Tetra bio pharma stock free
Overall, its balance sheet doesn't seem overly risky, at the moment, but we're always cautious until we see the positive free cash flow. With only CA$13.2m on the balance sheet, it would appear that its going to need to raise capital again soon. And over the same period it saw negative free cash outflow of CA$29m and booked a CA$28m accounting loss. And we do note that Tetra Bio-Pharma had an earnings before interest and tax (EBIT) loss, over the last year. Statistically speaking companies that lose money are riskier than those that make money. Given it has no significant operating revenue at the moment, shareholders will be hoping Tetra Bio-Pharma can make progress and gain better traction for the business, before it runs low on cash. So when considering debt, it's definitely worth looking at the earnings trend. But it is Tetra Bio-Pharma's earnings that will influence how the balance sheet holds up in the future. Succinctly put, Tetra Bio-Pharma boasts net cash, so it's fair to say it does not have a heavy debt load! When analysing debt levels, the balance sheet is the obvious place to start. This surplus suggests that Tetra Bio-Pharma has a conservative balance sheet, and could probably eliminate its debt without much difficulty. So it can boast CA$8.55m more liquid assets than total liabilities. Offsetting these obligations, it had cash of CA$16.2m as well as receivables valued at CA$536.0k due within 12 months. We can see from the most recent balance sheet that Tetra Bio-Pharma had liabilities of CA$5.22m falling due within a year, and liabilities of CA$3.00m due beyond that. TSX:TBP Debt to Equity History September 14th 2021 A Look At Tetra Bio-Pharma's Liabilities However, it does have CA$16.2m in cash offsetting this, leading to net cash of CA$13.2m. You can click the graphic below for the historical numbers, but it shows that as of May 2021 Tetra Bio-Pharma had CA$3.00m of debt, an increase on none, over one year. View our latest analysis for Tetra Bio-Pharma What Is Tetra Bio-Pharma's Debt? When we think about a company's use of debt, we first look at cash and debt together. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. In the worst case scenario, a company can go bankrupt if it cannot pay its creditors. Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. But the real question is whether this debt is making the company risky. ( TSE:TBP) does have debt on its balance sheet. Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that 'Volatility is far from synonymous with risk.' So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is.
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